Retail experiences begin with knowing your customer.

There was a time when legacy retailers like Sears, JCPenney, and Woolworths were more than just places to shop. They were anchors in the community, serving as the mainstay of our malls and the foundation of our downtowns. And a large part of the loyalty shoppers felt to these brands was based on the retailers’ connection to the community. It was a time when back to school always meant back to Sears — not just for you, but for all your friends and neighbors.

Fast forward to today where customers don’t even have to leave their homes to shop, and a few clicks deliver any product to their doorstep. In fact, some of the biggest names in the game, such as Amazon, eBay, and Alibaba, were built without a physical presence at all.

To attract customers in today’s digitalized world, you need more than a welcoming storefront — you need experiences that make an emotional connection with customers to draw them in and keep them coming back. Research by Forrester suggests that “how an experience makes the customer feel is the biggest predictor of loyalty in many industries.” And nowhere does this stand out more than in retail.

But to create an emotional connection that will drive loyalty requires more than creative ad campaigns or gimmicks, it requires data. The right data — collected in one place and connected to the customer.

“If you want to create connections with customers at any level, you need to understand who they are. You can’t understand them without the data.”

Michael Kleindirector of industry strategy for retail, Adobe

Get to the heart of the customer.

To best connect with customers on an emotional level, leading experience-based retailers start by identifying the kinds of data needed to understand their customers’ key emotional motivators. This data should not just tell them about their customers, but provide insights into what kinds of experiences their customers will best respond to.

Emotionally connected customers have twice the lifetime value as highly satisfied customers, according to research published in the Harvard Business Review. These emotionally connected customers not only buy more products and services, visit more often, and exhibit less price sensitivity, they also pay more attention to a brand’s communications and recommend the brand more often.

Yet since most paths to purchase look more like a maze than a straight line, gaining an understanding of who your customers are and what experiences drive them to purchase requires multiple types of data.

“Analytics is really the backbone of helping us be quantitative in our understanding of our customers,” said Mike Amend, former vice president of online at Home Depot. “[Data is] helping us understand what our customer journeys are, helping us understand what are the friction points or the fallout points of customers as they’re interacting through our experiences.”

To get this complete picture, retailers need to go beyond their first party data — email, direct mail, and CRM data — to additional types of information, such as web browsing activity or conversion history of an online visitor. They will also need to leverage second- and third-party data. By bringing this additional data together, retailers can then better segment audiences, discover new audiences through look-a-like modeling, and improve attribution.

Retail giant Target has seen the value of data in connecting with their customers on an emotional level. For over a decade they have used data to better segment and personalize their marketing efforts. As a result, they’ve built empathy with their customers by providing offers and coupons that align with significant life events such as a move or a marriage. And data is still fueling Target’s growth today as the retailer evolves to meet its customers where the data says they are — and that’s increasingly online. In 2016, according to Internet Retailer, Target’s online sales rose 23 percent year over year in the first quarter compared with a year-earlier rise of 38 percent.

As Target’s escalating online success shows, a good data strategy should go beyond just knowing who your customers are and what they want, to knowing how and where they interact with you. In fact, research in the Harvard Business Review shows that customers who engage in an omnichannel experience are much more emotionally connected and thus consistently more profitable.

Connect with customers to create empathy.

In a data-filled world, collecting the right data from the right sources can be a significant challenge. As complexity in the customer journey grows, retailers are finding it imperative to deliver a consistent experience across channels, including in-store and online. Yet doing so requires collecting data that can enable seamless cross-channel experiences.

Research highlighted in a Retail Week article indicates that shoppers now expect retailers to “know” their digital journey when they enter a physical store. About one-third (32 percent) of shoppers in the survey said they expect the stores they visit to know what prior research they’ve done on the retailers’ websites and apps — including their wishlists, abandoned carts, and related social media activity — so they can receive better service.

For retailers like Home Depot, leveraging the virtual alongside the physical is critical to delivering the relevant experiences to their customers. But they can only do so when they have the right types of data — both real-time and cross-channel.

1: Collect and respond to real-time data.

Nothing is more powerful than knowing in the moment what your customers are doing, where they are, and what they want. Accurate customer profiles, powered by real-time data intelligence, allow you to respond in a more personalized and consistent manner — seeing what their need is and responding to it.

For Home Depot, real-time data has allowed them to quickly and inexpensively get feedback on what types of offers or content are most relevant to customers. It has also helped them to “know” what their customers wants in the moment. For retailers like Home Depot, their mobile device app could automatically sense that a customer is in the appliance department and tailor an experience based on location — perhaps offering free delivery and installation on appliances.

2: Identify customers across digital touchpoints.

The customer journey is a complex and winding road. According to Econsultancy, a full 40 percent of people who start a journey on one device finish it on another. What’s more, customers expect retailers to retain knowledge of who they are, no matter what device they’re on.

When a customer adds products to a shopping cart on a smartphone, they expect that the same browsing history and shopping cart will be accessible even when switching to a laptop or tablet. Yet despite consumer expectations for a seamless cross-device shopping experience, delivering on it is not so easy. Without cross-device data, retailers find themselves with inaccurate conversion data, poor conversion attribution, and incomplete segmentation groups — leading to inconsistent or depersonalized experiences for the consumer.

Retailers can overcome this hurdle in some instances. On sites that require the customer to log in or “authenticate,” it is possible to determine which devices connect to which customer. However, rather than create more authentication events, retailers can join a device co-op — where members pool their data on device usage. Such a resource provides retailers with a powerful opportunity to gain information about their customers, and not just the device they’re using. Equally important, because only “the link” between devices is shared, not user profiles or site-visit data, customer privacy remains protected.

A device co-op not only helps brands recognize familiar consumers using unfamiliar devices, it provides the ability to connect the dots between interaction points on a customer’s digital journey. As a result, retailers can deliver consistent and personalized experiences to a person, not a device.

“Cross-device stitching gets really exciting when you move beyond focusing on user traits and begin tracking a customer across their day, serving them new and relevant content through device-level personalization.”

James Trudgianpartner innovation lead, Adobe

Know your customers inside and out.

It’s not enough to have the data you need — you need to effectively apply it in a way that helps you identify every customer’s emotional motivators with greater precision. But a complete view of your customers can only happen when you have a way for multiple data sources to talk to each other.

For many retailers, silos created by departments are a roadblock for unifying data, as are large legacy systems that spread data across all different parts of the business. Breaking down these silos isn’t easy, but you need a single view of the customer in order to know what content will deliver an emotional connection.

According to Econsultancy, less than 30 percent of marketers use call-center data to map and track website visits and customers who are engaging both online and offline. Yet knowing both offline and online data and how it fits into the full customer journey is critical to gaining a complete view of the customer.

Along with in-store purchase data, retailers can also gain insight into their customers’ brick-and-mortar buying habits, like the time of day they’re most likely to shop, the average time spent in a store, the frequency of their visits, or the categories of products for which they shopped. With this comprehensive view, retailers can then update product placements online and offline or further personalize digital promotional offers.

Consider a customer who makes a one-time golf club purchase in a sporting goods store and then continues to receive promotions for golfing equipment by email. Future content offers are guided by this single data point (the in-store purchase). However, in this instance, the club was purchased as a gift — the customer isn’t even a golfer — so the email offers are irrelevant.

But what if, through the melding of online search data and in-store visits, you learned that your customer frequently spent money on tennis equipment and clothing? Having this more complete picture, you would be able to provide much more relevant and emotionally appealing offers.

When you can unify all your data into a single view, you have a complete picture of who your customer is — at all times and on all devices. And from this evolved vantage point, you can deliver the types of experiences your customer wants — driving loyalty and increasing revenues.

Embrace data-driven experiences.

In the past, shoppers at retailers such as Sears, JCPenney, and Woolworths relied on the sales associates to deliver a personalized brand experience. Today, that emotional connection comes in different forms, one of which is data.

Yet, overwhelmed by the challenge of collecting and connecting data, many marketers have taken a step back rather than forward in their data-driven efforts. According to Econsultancy, the perceived opportunity for data-driven marketing has declined from 16 percent in 2016 to 12 percent in 2017.

2016

2017

The perceived opportunity for data-driven marketing has declined from 16% in 2016 to 12% in 2017.

But the opportunity remains and the reality is that the leading retailers — like Target, Home Depot, Amazon, and others — are embracing data to help connect with customers and deliver compelling experiences. For the rest of retailers, if you want to stay in the game, build loyalty, and win customers, you must do the same: incorporate a data-driven culture into your organization so you can personalize experiences and capture a larger audience.